Good morning, and welcome to the MBIA Inc. First Quarter 2012 Financial Results Conference Call. [Operator Instructions] I would now like to turn the call over to Greg Diamond, Managing Director of Investor Relations at MBIA. Please go ahead.

Greg Diamond

Thank you, Jackie. Welcome to MBIA's conference call for our first quarter 2012 financial results. We're going to follow a similar format as last quarter's call. Jay Brown and Chuck Chaplin will provide some brief comments and then we'll open the call for a question-and-answer session. As usual, members of the press and representatives from institutions litigating against us, which is now only Bank of America and Societe Generale, will not be able to ask questions on this call.

After the market closed yesterday, we posted several other items on our website, including our first quarter 2012 10-Q and operating supplement. In addition, the information to access the recorded replay of today's call is available on the website via the financial results press release that was issued yesterday.

The purpose of our call today is to discuss our most recent 10-Q to facilitate a greater understanding for investors. Our company's definitive disclosures are incorporated in our SEC filings. The 10-Q also contains information that may not be addressed on today's call. Please note that anything said on today's call is qualified by the information provided in the company's 10-Q, 10-K and other SEC filings. Please read our first quarter 10-Q as it contains our most current disclosures about the company and its financial and operating results. Also, please refer to our financial results release available on the website for definitions and a reconciliation of the non-GAAP terms that are included in our remarks today.

Now I will read our Safe Harbor disclosure statement. Our remarks on this conference call may contain forward-looking statements. Important factors, such as general market conditions and a competitive environment, could cause actual results to differ materially from those projected in our forward-looking statements. Risk factors are detailed in our 10-K, which is available on our website at mbia.com. The company cautions not to place undue reliance on any such forward-looking statements. The company also undertakes no obligation to publicly correct or update any forward-looking statement if it later becomes aware that such statement is no longer accurate.

And now, Jay will provide some introductory comments. Jay?

Joseph W. Brown

Thanks, Greg, and good morning, everyone. Chuck is going to take you through our first quarter results in more detail in a few minutes. But in short, our significant actions to bolster liquidity and mitigate volatility resulted in a disappointing adjusted pretax loss for the quarter. It was driven by realized investment losses, some additional losses on insured exposures and litigation costs and expenses, all items that have been impacting our results for the past few years. But looking forward, I firmly believe that potential future volatility has been substantially reduced by a combination of the massive reduction in our insured CDS exposures over the past few years, the near-term prospect for collections of putback recoverables, the continuing, albeit slow, burnout losses in our second-lien RMBS exposures and the impact of a gradually improving economy.

We've continued to make substantial progress in our risk reduction efforts at MBIA Insurance Corporation. So far this year, we have commuted or agreed to commute $11.5 billion of CDS exposures. These agreements were primarily in our insured CMBS and CRE/CDO portfolio. And since 2008, we have commuted or agreed to commute over $67 billion of exposure, dramatically reducing potential future volatility and rating agency capital requirements. However, there's still some work to be done here on a handful of transactions with a few remaining counterparties.

At the same time, our efforts continue unabated to force a handful of mortgage originators to honor their contractual obligations to repurchase ineligible loans from insurance securitizations. Given the magnitude of losses MBIA has sustained as a result of their fraud, collecting these recoverables is among our highest priorities.

On this front, we are pleased that our litigation against Bank of America continues to progress positively. In addition to the January loss causation ruling that was discussed in our last call, in February, we submitted our expert reports, which support in great detail the validity of our claims. And in April, the Appellate Division denied Bank of America's motion to again delay our successor liability claims, while the Supreme Court cleared the way for the discovery process to be completed. If the matter is not settled in the interim, we expect it will come to trial in early 2013.

Our putback claims against Bank of America are by far the most significant work for MBIA, with the next largest claims against Ally Financial's subsidiaries, RFC and GMAC Mortgage. Those cases are proceeding also through the discovery process and expert reports were filed in the RFC case last month.

We are well aware of the increasing likelihood that ResCap, which is owned by taxpayer-owned Ally Bank and which is the parent of RFC and GMAC, could file a bankruptcy petition. And we also know that ResCap did not make a debt service payment a few weeks ago. While this is not a good turn of events, we don't consider this to be new news.